Shell cracker project dominates PRA 2016 ‘scorecard’

Michael Bradwell

Energy may have been in a downturn in Southwestern Pennsylvania in 2016, but that didn’t stop industries of all types from making a huge capital investment in the Pittsburgh region – $10.2 billion – in manufacturing, health care, information technology, financial services and, yes, energy.

The $10.2 billion worth of total investment was the largest-ever annual amount recorded by the Pittsburgh Regional Alliance, which released the results Thursday of its 10th annual Business Investment Scorecard for the 10-county region that includes Washington and Greene counties.

The money spent accounted for 5,761 new jobs and retained another 5,583 positions, the group said.

Leading the list was Royal Dutch Shell’s $6.1 billion investment in a massive ethane cracker in Potter Township that is expected to be an anchor for an emerging petrochemical industry in Southwestern Pennsylvania.

“The table is set for the region’s future by leveraging the combined impact of manufacturing and energy,” said PRA President David Ruppersberger in announcing the results. “Without the natural resource of the shale gas – for which this region pioneered extraction – an ethane cracker would not have been a consideration.

“Now, with Shell’s investment in the region, we’ll be primed in a way we could not have previously imagined to further grow an industry – petrochemicals – that already has a foothold here.”

In addition to Shell’s investment bolstering the manufacturing sector, there was $3.11 billion in announced investment in projects related to the region’s energy sector, including Tenaska’s construction of a $785.2 million natural gas electric generating station in Westmoreland County and Energy Transfer Partners’ $1.5 billion natural gas liquids processing system, including a new pipeline network (which will begin in Butler County), as well as its construction of a new cryogenic plant in Washington County.

According to PRA, there were 245 economic development deals tracked during 2016, spanning the five key sectors of the regional economy – energy, advanced manufacturing, information technology, financial and business services, and health care and life sciences.

Washington County accounted for 13 investment projects, including a $30 million commitment by Mylan N.V. (life sciences) to expand its Southpointe headquarters and add 300 employees. There also were multiple investments by manufacturers in the Mon Valley, including a $3.7 million expansion by Pennatronics (advanced manufacturing); as well as the arrivals of manufactuers Retal Industries (plastics); Barchemy (food consulting); and Techmet (chemical milling) to the Donora Industrial Park.

In Greene County, Stahl’s Hotronix (image transfer) expanded.

Don Chappel, director of Greene County Industrial Developments Inc., who attended Thursday’s event, said he’s fielding more inquiries from companies as the area’s natural gas industry begins to rebound.

“The phones have been ringing more,” Chappel said, adding that the county also is branching out with its new Fayette-Greene Manufacturing Connection, which seeks ways to attract more manufacturing companies to the two counties.

Ruppersberger noted that just as it did in 2015, advanced manufacturing led with the number of investment deals and capital expenditures, as well as in new and retained jobs.

“Manufacturing projects were down 20 percent, but investments were off the charts,” Ruppersburger said.

His comment was a precursor to a panel discussion on Shell’s cracker project that featured Michael Marr, business integration lead for Shell Pennsylvania Chemicals; Denise Brinley, senior energy adviser for the state Department of Community & Economic Development; and Ron Whitfield, vice president of applied economics for IHS Markit Inc.

Marr explained that Shell chose the former Horsehead zinc smelting site in Beaver County based on multiple factors, noting its proximity to all forms of transportation, as well as to its customers in the petrochemical industry, 70 percent of whom are within 700 miles of the cracker, which will use ethane to make pellets used in a wide variety of applications.

Brinley and DCED Secretary Dennis Davin recently traveled to Houston, Texas, to present a study the department commissioned to demonstrate the impact petrochemicals have on Pennsylvania.

“After Shell’s investment decision, we are trying to understand what the long-term investment opportunities would be here,” Brinley said, adding that the goal is to attract more manufacturing to the region.

DCED selected IHS Markit, whose in-depth study concluded that the state could support multiple crackers, based on the sheer amounts of ethane being produced by drillers.

“We think we can do some of this here in our own backyard,” Brinley said. “We have started to change the perception of Pennsylvania as a place to do business” related to petrochemicals, she said.